Kampala. Umeme, the country’s largest energy distributor, will have to cope with a series of new stringent targets from the regulator whose likely implications could derail development in the electricity sector.
Daily Monitor understands that Electricity Regulatory Authority (ERA) board of directors sat on April 05 and among other things, approved the new performance targets, which could impact on the Electricity Connections Policy (ECP), investment in energy loss technology and reliability of power supply.
According to Modification of Licence Number 048 for Supply of Electricity, Umeme who is already distributing at least 97 per cent of all electricity used in the country, is required to reduce energy losses from 16.6 per cent to 13.79 per cent by the end of this year.
“The losses by end of 2020 should be at 13.01 per cent and 12.46 per cent by close of 2021. The target for 2022 is 11.76 per cent, 11.47 per cent (2023), 11.22 per cent (2024) and to 11.13 per cent by 2025,” according to the regulator’s new modifications.
Still on the performance parameters, Umeme should collect 99.62 per cent of the dues for energy billed this year, 99.7 per cent (2020), 99.8 per cent in Calendar Years 2021 and 2022. In 2023, 2024 and 2025, the company should collect 99.9 per cent of the energy billed.
To finance the activities, ERA has given Umeme a go-ahead to spend on Distribution Operation and Maintenance Costs (DOMC) $41.8 million (about shs155.8 billion) this year, which is $18.4m (Shs68.5b) less than what the company spent in 2018 alone.
When contacted, the State Minister for Energy, Simon D’Ujanga declined to comment referring this newspaper to the sector senior minister, Irene Muloni.
This year, Umeme was planning to invest $70m (Shs260.7 billion) on repair and maintenance of the grid, prepayment, debt collection, non-technical loss reduction expenses, administration, staff and transport.
The approved DOMC for 2020 is $40.8m (Shs152b), $41.9m (Shs156b in 2021), $43.7m (Shs163b, 2022), $47.9m (Shs178b, 2023), $47.9m (Shs178b, 2024) and $49.7m (Shs185b) in 2025.
But Umeme is unhappy on the grounds that low DOMC is likely to negatively impact on refurbishment of the distribution network, the quality and reliability of power supply.
Reduction of energy losses, which calls for investment in technology such as automated meter reading, prepaid meters, bigger and robust conductors to ably carry power from transmission to the distribution utility’s substations as well as the building of more substations to reduce distances over which power is carried, will be badly impacted.
A technical officer at the ministry of Energy said the regulator’s decision is likely to impact the implementation of the ECP because whereas Umeme is now expected to connect upwards of 240,000 customers annually, up from an average of 150,000, the company cannot spend so much on that without a nod from the regulator.
During a media engagement last week, ERA’s consumer and public affairs manager Julius Wandera, said ensuring quality and reliability of power supply requires serious investment.
The approval comes four months into the year, meaning Umeme has just eight months left to achieve what should be done in 12 months.